BCA must rethink its budget sums

The Business Council of Australia wants the government to have a long-term goal of a surplus of 1 or 2 per cent of gross domestic product (“Labor’s budget is broken: BCA", AFR, March 6).

In today’s dollars, that means asking for an excess of tax over spending of some $15 billion to $30 billion a year.

Obviously business itself likes to run at a profit with a surplus of revenue over expenses, but government does not need to do that.

Governments should set their fiscal policy according to the needs of the economy at the time. You would only go for a persistent government surplus if you thought there was a case for a permanent contractionary stance. And why stop at 1 or 2 per cent if surpluses are such a good idea?

Permanent government surpluses also seem a strange call on the part of an organisation that usually calls for cuts in company tax.

How would we finance the $15 billion to $30 billion? Are the BCA’s member companies volunteering to pay more company tax to assist the government run such a surplus?